This error message is issued if you try to assign a local procedure to a procedure variable, or pass it as a procedural parameter. 

This is illegal, because the local procedure could then be called even if the enclosing procedure is not active. This situation would cause the program to crash if the local procedure tried to access any variables of the enclosing procedure.

program Produce;

var
  P: Procedure;

procedure Outer;

  procedure Local;
  begin
    Writeln('Local is executing');
  end;

begin
  P := Local;       (*<-- Error message here*)
end;

begin
  Outer;
  P;
end.

The example tries to assign a local procedure to a procedure variable. This is illegal because it is unsafe at runtime.

program Solve;

var
  P: Procedure;

procedure NonLocal;
begin
  Writeln('NonLocal is executing');
end;

procedure Outer;

begin
  P := NonLocal;
end;

begin
  Outer;
  P;
end.

The solution is to move the local procedure out of the enclosing one.